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Boeing CEO to Step Down in Overhaul · Bloomberg Intelligence

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  Speaker 2: Let's go to that top story of the morning, and
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  Speaker 2: that is Boeing. So that's doc up. But see, I
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  Speaker 2: think we're just up by about one percent here as
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  Speaker 2: David cal Hun will be stepping down as CEO, but
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  Speaker 2: not until the end of the year. Apparently he's going
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  Speaker 2: to be intimate and intimately I made that word up,
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  Speaker 2: but he's going to be involved into a replacement, which
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  Speaker 2: I also think is quite interesting. So I want to
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  Speaker 2: go to George Ferguson. He's the guy. He's the airline
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  Speaker 2: guy that you got to go to. He is senior aerospace,
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  Speaker 2: defense and airlines analysts joining us now in Princeton. All right, George,
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  Speaker 2: your reaction to the news that we saw earlier, and
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  Speaker 2: then we'll walk up to what's next.
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  Speaker 3: Yeah, So my action was, you know, I think we
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  Speaker 3: we thought Dave Calhoun probably would be going I hate
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  Speaker 3: to sort of wish that in anybody. But it seemed that,
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  Speaker 3: you know, the problems in the manufacturing business just there
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  Speaker 3: were just too many of them over too long a
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  Speaker 3: period of time to say that he was as effectual,
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  Speaker 3: if that's a right word, as he as he should
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  Speaker 3: have been at bringing everything, you know, back into order.
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  Speaker 3: It does seem weird that it's going to take them
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  Speaker 3: till the end of twenty twenty four define his replacement.
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  Speaker 3: There's a lot of things that have to happen between
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  Speaker 3: now and then that the company just can't wait for.
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  Speaker 3: Things like the purchase of Spirit Aerosystems, which should improve
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  Speaker 3: reporting lines should have been improved, the stability of the
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  Speaker 3: you know, the production process, uh, and the quality process.
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  Speaker 4: That's super important.
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  Speaker 3: They've got the they've got to you know, serve to
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  Speaker 3: the FAA their view and how they're gonna they're gonna
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  Speaker 3: stabilize their production process. That that's coming due here too.
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  Speaker 3: And at the same time, right they've got to start
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  Speaker 3: to increase build rates so they can improve profits and
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  Speaker 3: cash flow.
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  Speaker 4: They can't wait a year on that either.
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  Speaker 3: So there's a lot of super important things that are
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  Speaker 3: happening this year to wait till the end of the
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  Speaker 3: year to replace the CEO that doesn't seem to have
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  Speaker 3: been able to get that job done well. It seems
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  Speaker 3: like a lengthy timeline to me, But it may just
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  Speaker 3: be that the board was flat footed and realizing that
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  Speaker 3: the CEO had to go and as nowhere in a
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  Speaker 3: search and so they've got to start from scratch here
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  Speaker 3: and figure out who the next person is.
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  Speaker 5: What can you tell us about Stephanie Pope, She's gonna
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  Speaker 5: be stepping up and taking a big role with the
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  Speaker 5: aircraft business.
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  Speaker 3: Yeah, so she's been around for a while and she's
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  Speaker 3: been CFO of that aircraft business. So it seems like
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  Speaker 3: a logical inside choice. You know, it may not be
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  Speaker 3: the final choice there, although it may well be. But
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  Speaker 3: I think when you have a you know, a head
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  Speaker 3: of that department, stand deal who's leaving after thirty us
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  Speaker 3: heres at the company, they're hard shoes to fill, and
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  Speaker 3: then you know, you look around internally for who could
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  Speaker 3: be the next person. The CFO is always in particularly
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  Speaker 3: decent shape because they understand at least all the financials
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  Speaker 3: about the business. She's also had, you know, had positions
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  Speaker 3: at blowing Boeing Global Services, which is a super successful
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  Speaker 3: business inside Boeing High teens margins. To me, the only
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  Speaker 3: thing I don't see in her background is that manufacturing
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  Speaker 3: skill set. I think the next CEO and the next
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  Speaker 3: head of Boeing Commercial Airplanes has to really have a
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  Speaker 3: manufacturing engineering mindset background, and I think that's that's what
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  Speaker 3: I don't quite see.
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  Speaker 2: There, sort of like Larry culp.
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  Speaker 3: No, I mean, Lowry obviously is pretty busy, and honestly,
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  Speaker 3: the job he has now a GE could be better, better, profits,
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  Speaker 3: more fun than Boeing because there's a lot of great
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  Speaker 3: technology inside GE and there's a huge bow wave of
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  Speaker 3: a lot of maintenance coming that's really high mind margin.
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  Speaker 4: I think you'd really have to work hard.
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  Speaker 2: To get like But George, I mean, does he like
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  Speaker 2: fun or does he like a challenge? I mean he
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  Speaker 2: was the one that went did GE to begin.
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  Speaker 4: With, Sorry you were you broke up a little bit there.
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  Speaker 2: Said Oh, it's saying that does he like fun or
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  Speaker 2: does he like a challenge because he was the one
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  Speaker 2: that went to GE in the first place when it
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  Speaker 2: was a hot mess.
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  Speaker 3: I do think he likes a challenge, and I think
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  Speaker 3: he showed his ability to navigate it really.
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  Speaker 4: Well at GE.
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  Speaker 3: But again, you know they're just kind of getting to
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  Speaker 3: the super fun part. I think there's still challenge inside
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  Speaker 3: ge but he's just getting to the point where he's
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  Speaker 3: got aerospace broken out and he can really make a
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  Speaker 3: lot of hay here. So I don't someone like him
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  Speaker 3: is absolutely what I think Boeing needs. I don't know,
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  Speaker 3: maybe he's got a you know, maybe there's a protege
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  Speaker 3: somewhere inside there that they could tap or something.
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  Speaker 5: So thinking about who could be the next CEO, here
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  Speaker 5: is the expectation, George, that it'll come from an external
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  Speaker 5: candidate or or internally And are there any early front runners?
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  Speaker 5: Do you think?
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  Speaker 4: Yeah?
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  Speaker 3: So, I definitely think it's going to come external, right.
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  Speaker 3: I just think the fact that you've seen this purge
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  Speaker 3: of the of the CEO, you see the purge of
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  Speaker 3: commercial airplane president, means that we've depleted some you know,
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  Speaker 3: we've depleted some talent there you look, you know, there
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  Speaker 3: there was you know, former heads of Boeing's commercial airplanes
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  Speaker 3: that had left, you know when when Muhlenberg came on,
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  Speaker 3: they could potentially be, you know, in the running for
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  Speaker 3: something like this. I know a couple of them wanted
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  Speaker 3: the CEO job and didn't get it, but I'm almost
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  Speaker 3: positive you're talking about something that's going to be outside.
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  Speaker 3: It's Ray Connor is the name that comes to mind.
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  Speaker 3: Used to be the head of Boeing Commercial. I'm not
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  Speaker 3: sure what he's doing now, but he might be on
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  Speaker 3: the list similar.
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  Speaker 2: What's the culture like at a Boeing in terms of
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  Speaker 2: getting an outsider?
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  Speaker 4: You know, I think Boeing is one of those companies.
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  Speaker 3: I think you get a job and you stick around
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  Speaker 3: for lots and lots of years, and so, you know,
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  Speaker 3: I think that bringing people in from outside is something
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  Speaker 3: you do only when you have a breakdown like you've
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  Speaker 3: had now. Right under normal circumstances, there would be very
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  Speaker 3: clean lines of succession inside Boeing. You know, you would
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  Speaker 3: move up through the ranks and expect opportunities as you
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  Speaker 3: as you rose. But there's been so much tumult in
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  Speaker 3: this business over the last I don't know, you know,
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  Speaker 3: four years or so, that I think that it's a
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  Speaker 3: time in their history where they're going they're going to
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  Speaker 3: be going outside a lot more to replenish some of
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  Speaker 3: some of these senior management ranks that they've just they've turned.
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  Speaker 5: Over a bunch of it and George it seems like
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  Speaker 5: this is no quick fix here. It seems like it
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  Speaker 5: was years, maybe even decades in the making in terms
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  Speaker 5: of maybe the deterioration of some of their quality controls.
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  Speaker 5: Here when you talk to in an industry folks, people
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  Speaker 5: at Boeing, is there a pathway to kind of get
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  Speaker 5: back to where they were in terms of quality?
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  Speaker 3: I think there is, But it's a lot of attention
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  Speaker 3: to detail. And like you said, it's slow work, so
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  Speaker 3: you can't you can't sort of wave a wand I
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  Speaker 3: think and make it, you know, happen overnight. Really, you know,
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  Speaker 3: I think has a lot to do with people and processes, right,
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  Speaker 3: And that's why I think you want someone like a
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  Speaker 3: Larry Koppe who loves people and processes. You need and
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  Speaker 3: I mean that just takes time. You need a lot more.
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  Speaker 3: You need training, you need, you need you know in
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  Speaker 3: the interm you probably need to beef up some of
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  Speaker 3: the oversight. You need to get into your supply chain.
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  Speaker 3: You need to give them a hug, you need to
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  Speaker 3: help them out, you know, help them bring you quality products.
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  Speaker 3: I mean, it's not a it's not a hey, how
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  Speaker 3: are you going to make my margins work better? In
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  Speaker 3: the next couple of years discussion. Right, it's really like
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  Speaker 3: I said, it's people and processes. It's a softer side
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  Speaker 3: of management. I think Boeing over the last decade or
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  Speaker 3: two really was more into the how do I squeeze
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  Speaker 3: you to get you know, you to give me products
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  Speaker 3: at a cheaper price so I can build my margins.
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  Speaker 3: There's a you know, it's what is its recipe for success?
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  Speaker 3: It wasn't that wasn't quite the term, but there was
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  Speaker 3: a term like that that Boeing was using with their suppliers.
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  Speaker 3: It was all about squeezing them. So the supply chain
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  Speaker 3: is all you know, they've been scarred, they're you know,
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  Speaker 3: they're they're they're worried about when Boeing comes to talk
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  Speaker 3: to them. And I think they need to get to
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  Speaker 3: a world where when Boeing shows up that they think
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  Speaker 3: someone's there to help them and is looking out for
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  Speaker 3: their best interests partnering for success.
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  Speaker 2: Sorry, I love that idea though. It's like you just
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  Speaker 2: need a hug and be like we got this guys,
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  Speaker 2: versus like squeezing out of the suppliers. It's just like
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  Speaker 2: a great visual for a manufacturing giant like Boeing George
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  Speaker 2: Ferguson joining us. He is Bloomberg Intelligence is senior Aerospace,
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  Speaker 2: Defense and airline analyst. I think that's gonna be so interesting, Like,
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  Speaker 2: how do you even start a search like this?
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  Speaker 5: Yeah, you know, I guess, as George was suggesting, you know,
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  Speaker 5: a couple of attributes. You need engineering expertise and manufacturing expertise.
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  Speaker 5: This is not a marketing story, you know, it doesn't
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  Speaker 5: feel like it's a strategy story that you go to
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  Speaker 5: like a consultant or something. It's just nuts and bolts
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  Speaker 5: manufacturing at the as George has told us in the past,
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  Speaker 5: at the highest tolerance levels you can ever imagine, making
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  Speaker 5: an airplane's a little bit different than making an automobile
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  Speaker 5: in terms of tolerances and things like that. So I
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  Speaker 5: would guess that there's relatively a small pool of people
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  Speaker 5: that kind of that kind of fifill that.
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  Speaker 2: So I wonder where the timing is for that, Like
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  Speaker 2: knowing that there's a small pool of people, Like why
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  Speaker 2: do this write like today but then wait for the
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  Speaker 2: rest of the year.
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  Speaker 5: I don't just get I think this it just feels
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  Speaker 5: like this was tied into the news we got Friday
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  Speaker 5: about oh, the certain members of the board are going
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  Speaker 5: to go on a listening tour with our big clients
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  Speaker 5: without the CEO. I think that it feels to me,
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  Speaker 5: at least some of these big airlines said, you know what,
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  Speaker 5: you need to make a change there at the top,
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  Speaker 5: and you need to see that started now. And I
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  Speaker 5: think they probably just kind of stooed on that over
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  Speaker 5: the weekend, and this is the decision we come up,
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  Speaker 5: so we'll stay on top of that.
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• 10:01
  Speaker 1: Just say Alexa playing Bloomberg eleven thirty.
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  Speaker 5: Alex. I'm seeing a red headline cross to Bloomberg turmoil here.
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  Speaker 5: Trump bond reduced to one hundred and seventy five million
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  Speaker 5: dollars in New York fraud case. So I guess that's
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  Speaker 5: a piece of good news for the former President's a
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  Speaker 5: lot better than the four hundred and fifty four million
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  Speaker 5: he was.
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  Speaker 2: There and then it was one hundred and twenty percent
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  Speaker 2: to post. It was even more than that. He has
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  Speaker 2: said last week that President Trump has almost I'm quoting
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  Speaker 2: five hundred million dollars in cash, and that he will
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  Speaker 2: use a substantial amount of that to fund his campaign
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  Speaker 2: to return to the White House. In a court Finally,
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  Speaker 2: he did claim that he'd need closer to one billion
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  Speaker 2: dollars in reserves to cover the bond and still have
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  Speaker 2: enough cash on hand to run his sprawling real estate company.
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  Speaker 2: So I mean anything at that point three hundred million
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  Speaker 2: dollar reduction potentially helping him as well. Trump has said
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  Speaker 2: that the cash crunch had emerged after thirty insurance companies
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  Speaker 2: that arranged such bonds refused to take any of his
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  Speaker 2: properties as collateral. So the latest headline is that his
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  Speaker 2: bond reduced payment for President Trump now to one hundred
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  Speaker 2: and seventy five million dollars in that New York fraud case.
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  Speaker 2: Remember the overall penalty was one hundred and fifty four million,
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  Speaker 2: and you usually have to pay more for that bond.
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  Speaker 5: Yeah, So the question is does he have the cash
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  Speaker 5: with you know where wherewithal to make that one hundred
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  Speaker 5: and seventy five million dollars satisfy that seventy five hundred
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  Speaker 5: million bond. I guess that's the next question. But that's
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  Speaker 5: something I think they would have to be answered again today, right.
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  Speaker 2: I have no idea. This is this is why I'm
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  Speaker 2: not a lawyer. And also I just pointed, but he's
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  Speaker 2: also a sitting for one of his criminal cases too.
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  Speaker 5: Yes, the I guess. I see some video shots of
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  Speaker 5: the courthouse in Manhattan. I guess this on the hush
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  Speaker 5: money payments. Apparently that is also going on today down there.
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  Speaker 5: So again, so I guess I think on the margin,
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  Speaker 5: a piece of good news for the former president his
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  Speaker 5: bond reduced to one hundred and seventy five million dollars
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  Speaker 5: in the New York fraud case. So again, I guess
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  Speaker 5: the next steps will be just how do they How
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  Speaker 5: does former President Trump and his team, how do they
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  Speaker 5: satisfy that that bond?
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  Speaker 2: Do they keep fighting it? Or I think he's ten
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  Speaker 2: days right to deliver that money? So is there anything
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  Speaker 2: that's needful?
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  Speaker 5: Well, something was due today, I thought today was on
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  Speaker 5: the former bond. Maybe this is a new bond or something.
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  Speaker 2: Well, this is that President Trump must pay that one
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  Speaker 2: hundred and seventy five million dollars bond within ten days. Yes,
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  Speaker 2: that's the court, So it gives him some time, I
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  Speaker 2: think to get it together. So I wonder like where
• 12:22
  Speaker 2: that comes from, yep, and how that winds up coming
• 12:26
  Speaker 2: from there? You're joining us now. As Eric Clarson, Bloomberg
• 12:29
  Speaker 2: Legal reporter, I saw him, he literally ran from his desk,
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  Speaker 2: So don't mind if he's a little out of breath.
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  Speaker 2: Were you expecting or reduced bond here?
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  Speaker 6: You know, I would have thought that if they were
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  Speaker 6: going to reduce it, they would have put it at
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  Speaker 6: the one hundred million dollar request that Trump had made,
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  Speaker 6: because he had said that that was the maximum he
• 12:49
  Speaker 6: was able to actually arrange. So it'll be interesting to
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  Speaker 6: see if Trump says that he can go ahead and
• 12:55
  Speaker 6: do this a larger one.
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  Speaker 5: So but if nothing else, it buys him another ten days.
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  Speaker 5: Are we reading that correctly? That he had had to
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  Speaker 5: satisfy that foreurner fifty four million dollars bond today, But
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  Speaker 5: now with this reduction, it kind of starts to clock again.
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  Speaker 4: Is that exactly?
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  Speaker 6: So that definitely, for now the New York Attorney General
• 13:12
  Speaker 6: won't be trying to seize his assets, which was the
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  Speaker 6: big fear of starting today.
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  Speaker 2: So can you just wrap this in? So what was
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  Speaker 2: the argument, like how did they arrive at that one
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  Speaker 2: seventy five from the four fifty four, Like, what is
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  Speaker 2: a conversation around that? And is that the normal conversation
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  Speaker 2: we would hear from anybody who was going and trying
• 13:30
  Speaker 2: to get the fine reduced.
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  Speaker 6: Well, it's a pretty unusual situation to begin with, just
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  Speaker 6: because normally, with damage awards of this big and bonds
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  Speaker 6: this big, they involve like really big fortune five hundred
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  Speaker 6: companies or things like that. And as Trump's lawyers argued,
• 13:45
  Speaker 6: you know, for a privately held company, the Trump organization
• 13:49
  Speaker 6: is huge, but not you know, as massive as some
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  Speaker 6: big corporations. That it was just really difficult for them
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  Speaker 6: to arrange a bond of this size. So it's all
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  Speaker 6: kind of novel. It's an unusual situation all around. I
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  Speaker 6: haven't had a chance to read the whole decision yet,
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  Speaker 6: but I think the appeals court just decided to have
• 14:05
  Speaker 6: a little bit of mercy on him while still putting
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  Speaker 6: him under some pressure to arrange a bigger bond than
• 14:10
  Speaker 6: he says he was able to.
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  Speaker 5: Okay, so that's that. So we have I guess ten
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  Speaker 5: days to get to the next chapter here. But he's
• 14:17
  Speaker 5: still former president shub is still going to be down
• 14:20
  Speaker 5: in a courtroom in Manhattan today, right.
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  Speaker 4: Right, that's correct.
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  Speaker 6: He has a hearing in what is probably going to
• 14:25
  Speaker 6: be his first criminal trial. They haven't scheduled the new
• 14:29
  Speaker 6: date for that yet. It was supposed to start today,
• 14:30
  Speaker 6: but they delayed it because of some new evidence. So
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  Speaker 6: he's been in court with his lawyers this morning. His
• 14:36
  Speaker 6: lawyers are getting grilled a bit by the judge in
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  Speaker 6: that case. That it'll be interesting to see what happens
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  Speaker 6: with that trial. They could set a new date for
• 14:43
  Speaker 6: that today, it could be as soon as next month.
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  Speaker 2: And what is the argument here?
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  Speaker 7: Like?
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  Speaker 2: Which one is this one?
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  Speaker 6: This is the so called hush money case. He's accused
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  Speaker 6: of falsifying business records to conceal hush money payments to
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  Speaker 6: a porn star before the twenty sixteen election.
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  Speaker 5: And he still had such Okay, so we get this one,
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  Speaker 5: and there's still some other things going on right right there?
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  Speaker 5: I mean the January I guess that the January sixth
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  Speaker 5: case is that federal in Washington. And do we have
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  Speaker 5: any sense of timing on that?
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  Speaker 6: I wish, I wish I knew we still have any
• 15:13
  Speaker 6: dates for the other three trials, not yet other three
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  Speaker 6: trials you gotta keep on top of me.
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  Speaker 2: I mean, do you like an Excel spreadsheet?
• 15:20
  Speaker 1: Yeah?
• 15:20
  Speaker 2: Okay, you do. Okay, he's literally not kidding. There's one
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  Speaker 2: more question on the on the on the bond here,
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  Speaker 2: What is your question now, Like, now that we know
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  Speaker 2: the actual number and it's in that weird spot, higher
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  Speaker 2: than he said he could pay, but much lower than
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  Speaker 2: the original what is your question?
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  Speaker 6: My question now is are they going to stand by
• 15:39
  Speaker 6: what they said, which was that there was no way
• 15:41
  Speaker 6: in the world that could get a bigger bond than
• 15:42
  Speaker 6: one hundred million, or are they going to say okay,
• 15:46
  Speaker 6: fine and circle back and try to see what they
• 15:48
  Speaker 6: can do because he said that if there was anything
• 15:50
  Speaker 6: more than one hundred million, he'd be forced to sell
• 15:53
  Speaker 6: some assets in order to raise that extra cash because
• 15:56
  Speaker 6: those companies that arrange bonds won't take his real estate
• 15:59
  Speaker 6: as collateral.
• 16:00
  Speaker 2: It's a head scratcher. Oh, I guess seventy five millions
• 16:02
  Speaker 2: better than you know, adding on four hundred months, right, Yeah,
• 16:04
  Speaker 2: I mean there is.
• 16:05
  Speaker 5: That'd be a good day for the for the president today,
• 16:07
  Speaker 5: just from how the math works. Eric, thanks so much
• 16:09
  Speaker 5: for literally running down from your news desks. To get
• 16:13
  Speaker 5: the latest. Here, Eric covers all the legal stuff for
• 16:16
  Speaker 5: Bloomberg News.
• 16:19
  Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
• 16:23
  Speaker 1: weekdays at ten am Eastern on Affo, card Play and
• 16:26
  Speaker 1: Android Auto with the Bloomberg Business App. Listen on demand
• 16:29
  Speaker 1: wherever you get your podcasts, or watch us live on YouTube.
• 16:34
  Speaker 2: On Friday, SMP posting it's best week of the year,
• 16:37
  Speaker 2: plus last week saw the most amount of SMP fifty
• 16:41
  Speaker 2: two week highs in nearly three years. I thought that
• 16:43
  Speaker 2: was a really fun step, right, that's a good one.
• 16:45
  Speaker 5: It goes to the breath of the.
• 16:46
  Speaker 2: Market exactly, So it's not just about tech, and we'll
• 16:49
  Speaker 2: kind of see you this play out as well as
• 16:50
  Speaker 2: tech comes under attack in Europe as well as the
• 16:52
  Speaker 2: chips in China. So joining us sound to discuss is
• 16:54
  Speaker 2: Katerina Simonetti, a Senior vice president Private wealth advisor over
• 16:58
  Speaker 2: at Morgan Stanley Private Wealth Management. Keterina, are we going
• 17:01
  Speaker 2: to expect the same kind of momentum within the S
• 17:05
  Speaker 2: and P and the overall US DOC market next quarter?
• 17:08
  Speaker 8: Alex, thank you for having me on the show. You
• 17:11
  Speaker 8: know what, an incredible start of the year, but really
• 17:13
  Speaker 8: first three months in and now is already approaching forty thousand.
• 17:20
  Speaker 8: You know, at least we're you know, seemingly a few
• 17:22
  Speaker 8: training sessions away, and the real question is going to
• 17:26
  Speaker 8: be are these price levels of equities are going to
• 17:29
  Speaker 8: be supported by earnings? You know, we're about to approach
• 17:33
  Speaker 8: this you know, quiet time, which usually what happens. The
• 17:36
  Speaker 8: bit of an information vacuum is something that we see
• 17:40
  Speaker 8: between the earning sessions. But when we come back with
• 17:43
  Speaker 8: new earning session in mid April, you know, the question
• 17:46
  Speaker 8: really for the the the that pricing, that that tailwind
• 17:52
  Speaker 8: for the prices and equities to continue going higher will
• 17:55
  Speaker 8: be all up to earnings and we're priced to perfection. Now,
• 17:59
  Speaker 8: the question is, you know, what can we expect going forward?
• 18:03
  Speaker 7: So?
• 18:03
  Speaker 5: How how do you feel about valuation in this market?
• 18:05
  Speaker 4: Are you?
• 18:06
  Speaker 5: A lot of some folks are saying, hey, if you
• 18:08
  Speaker 5: strip out some of those magnificent four, five, six, whateverever
• 18:11
  Speaker 5: the name names are today, you pull those out, the
• 18:14
  Speaker 5: market's you know that valuation seems okay? Do you do
• 18:18
  Speaker 5: that or how do you think of that valuation?
• 18:20
  Speaker 8: Well, the biggest question that we get from our clients
• 18:24
  Speaker 8: is when is it the good time to take the
• 18:26
  Speaker 8: profits of the table. When is the good time, you know,
• 18:29
  Speaker 8: to really realize some of these earnings. And it's a
• 18:31
  Speaker 8: really difficult question to answer because we can never effectively
• 18:35
  Speaker 8: pull either the top or the bottom of the market.
• 18:37
  Speaker 8: But we know that there are certain prices, you know,
• 18:40
  Speaker 8: that are higher than we've expected them to be in
• 18:43
  Speaker 8: certain areas of the market because of AI, because you know,
• 18:46
  Speaker 8: some technologies, some companies that are you know, looking to
• 18:49
  Speaker 8: increase their profitability through this investments in AI. You know so,
• 18:53
  Speaker 8: but this is not the time to be enamored with growth.
• 18:56
  Speaker 8: This is the time to take the total picture into
• 18:59
  Speaker 8: account and not give up on value just because this
• 19:03
  Speaker 8: bullish outlook in the market.
• 19:05
  Speaker 2: What does value mean to you? I feel like this
• 19:07
  Speaker 2: is like a meal, This is like a deep question.
• 19:09
  Speaker 2: But what is value to you right now?
• 19:12
  Speaker 8: Alex? You know, for many, many years, you know, one
• 19:15
  Speaker 8: of the stables of the ever suppried portfolios have been
• 19:17
  Speaker 8: this blue chip dividend being stocks. And this is the
• 19:20
  Speaker 8: sector in the market that has not performed quite as
• 19:23
  Speaker 8: well as these exciting growth names. But you know, the
• 19:27
  Speaker 8: areas like consumer stables, healthcare, financials, materials, industrials. You know,
• 19:32
  Speaker 8: in the long run. When we think of AI story
• 19:35
  Speaker 8: as a whole, all of these sectors tend to benefit
• 19:38
  Speaker 8: and the value of having these bluechip dividend being stocks
• 19:42
  Speaker 8: in the portfolio, you know, plays a huge role in
• 19:45
  Speaker 8: risk management. The other side of it this is, you know,
• 19:48
  Speaker 8: beyond your questions about the value, but also small and
• 19:51
  Speaker 8: MidCap you know stocks and the role they play, you know,
• 19:54
  Speaker 8: in this total portfolio construction. So there are a lot
• 19:56
  Speaker 8: of areas in the market that did not have this
• 19:59
  Speaker 8: huge drawn up. So this will be a good time
• 20:01
  Speaker 8: to take maybe a little bit of a profit and
• 20:03
  Speaker 8: move into some of the areas that are positioned for growth.
• 20:06
  Speaker 5: You know, looking for maybe different sectors that might be opportunistic.
• 20:10
  Speaker 5: You know, one of them is energy. I just look
• 20:12
  Speaker 5: at WTI crude oil up another one point seven percent today,
• 20:15
  Speaker 5: We're just about eighty two dollars a barrel in WTI
• 20:17
  Speaker 5: crude oil. How do you think about the the energy
• 20:20
  Speaker 5: space here? Again, people, I think there's a little bit
• 20:23
  Speaker 5: of concern about where are we in this transition to
• 20:25
  Speaker 5: green energy? Is it's slowing down? How do we think
• 20:27
  Speaker 5: about that?
• 20:29
  Speaker 8: Now we're enthusiastic about the green energy and sustainable energy,
• 20:34
  Speaker 8: but you know, we're not quite there yet, and yet
• 20:36
  Speaker 8: the broader energy sector is under pressure because of the
• 20:40
  Speaker 8: overall geopolitical environment, you know. With that said, the demand
• 20:44
  Speaker 8: for energy is very strong, you know, so we like
• 20:48
  Speaker 8: energy as this sector that plays the role in the portfolio.
• 20:52
  Speaker 8: Energy companies, you know, pay excellent dividends. And because of
• 20:56
  Speaker 8: the strong demand and increasing demand in the world and
• 21:00
  Speaker 8: the fact that we're not quite ready to switch into
• 21:03
  Speaker 8: the green and energy sources quite yet, you know, we
• 21:05
  Speaker 8: hope this happens soon, you know, but for now, you know,
• 21:08
  Speaker 8: we love him and having energy exposure and our portfolios.
• 21:12
  Speaker 2: So to that point, Paul, for the quarter to date,
• 21:15
  Speaker 2: we have communications services in tech. Okay, they're the top
• 21:17
  Speaker 2: performers in the S and p right, it's an Amazon
• 21:19
  Speaker 2: big tech story. But energy is up over eleven percent,
• 21:22
  Speaker 2: Financials up ten percent, industrials up ten materials up six.
• 21:25
  Speaker 2: I mean, and if you just look at the last month,
• 21:27
  Speaker 2: it's really been those guys, the financials and energy industrials
• 21:30
  Speaker 2: that have really been outperforming. Do you think, Keterina, that
• 21:34
  Speaker 2: the movement into those kind of names will help offset
• 21:39
  Speaker 2: any weakness in tech?
• 21:42
  Speaker 8: Well, of course, Alex, and this is not to say
• 21:44
  Speaker 8: that we should give up on.
• 21:45
  Speaker 2: Tech, sure, sure, but like but the rotation will be
• 21:47
  Speaker 2: enough to support the headline level.
• 21:50
  Speaker 8: Absolutely, it is really the story. The real story, in
• 21:53
  Speaker 8: my opinion, is really the fact that all these innovations
• 21:56
  Speaker 8: in tech are going to have across the other industries,
• 21:59
  Speaker 8: and the fact that when we look at the previous year,
• 22:01
  Speaker 8: the underperformance in these sectors, the valuations that look attractive,
• 22:05
  Speaker 8: the competitive positioning, the fact that these companies have been
• 22:09
  Speaker 8: very smart with their costs. You know, they're running you know,
• 22:12
  Speaker 8: the good, good models, and their prices are looking attractive.
• 22:16
  Speaker 8: You know, especially when we think about the environment, where
• 22:19
  Speaker 8: we're expecting few rate cuts and you know, it will
• 22:22
  Speaker 8: be easier for these companies to broader their profit margin
• 22:26
  Speaker 8: in the environmental rates are a little bit lower than where
• 22:29
  Speaker 8: they are today.
• 22:30
  Speaker 5: And ketterine it last week was a week of for
• 22:33
  Speaker 5: much of us to hear from the central bankers around
• 22:35
  Speaker 5: the world, and I guess the tone coming out of
• 22:38
  Speaker 5: not only the FED but some other central banks is
• 22:41
  Speaker 5: probably a little bit more dubbish than maybe people had
• 22:43
  Speaker 5: thought going into last week. What's your take about how
• 22:47
  Speaker 5: the FED is going to kind of behave over the
• 22:49
  Speaker 5: coming months.
• 22:50
  Speaker 8: Well, it's hard to know what they're going to do it.
• 22:53
  Speaker 8: Even if we look at the projection of expectations this
• 22:56
  Speaker 8: year alone, we started in January expecting for rate cuts,
• 23:00
  Speaker 8: and right now there are opinions out there that there
• 23:02
  Speaker 8: will not be rate cuts at all. At Morgan Stanley,
• 23:05
  Speaker 8: we still expect that we're going to have three rate cuts,
• 23:08
  Speaker 8: and that FED is, you know, at this point his
• 23:11
  Speaker 8: position to do just that, you know, But what we
• 23:14
  Speaker 8: tell our clients is that they should not necessarily, you know,
• 23:18
  Speaker 8: adjust or make drastic changes in their portfolios based on
• 23:22
  Speaker 8: the FED action. You know, in the going forward, of course,
• 23:25
  Speaker 8: any type of right cuts we get is going to
• 23:27
  Speaker 8: be the economic stimulus. It's something that is going to
• 23:29
  Speaker 8: benefit the economy in the long run, but in the
• 23:31
  Speaker 8: short run it is really more earnings, labor market overall,
• 23:36
  Speaker 8: you know, strength of the economy that is proven to
• 23:39
  Speaker 8: be much more resilient that you know.
• 23:40
  Speaker 4: That we thought.
• 23:42
  Speaker 2: And then to that point, I wonder that if the
• 23:44
  Speaker 2: way to express rate cuts, whether it's three, two or one,
• 23:47
  Speaker 2: because I think it was Bostic was really talking about
• 23:49
  Speaker 2: maybe one cut. You also have Lisa Cook speaking right now.
• 23:53
  Speaker 2: She says disinflation has been bumpy and uneven, and cutting
• 23:56
  Speaker 2: too late could wind up hurting, and cutting too soon
• 23:59
  Speaker 2: could also so heard on the growth and then the
• 24:01
  Speaker 2: inflation front. So if you're trying to gain that out,
• 24:04
  Speaker 2: how do you express that?
• 24:07
  Speaker 8: Well, you know, I think that that one clear action
• 24:10
  Speaker 8: right now is to take advantage of the higher uelds
• 24:12
  Speaker 8: and fixed income while they're still available, because you know,
• 24:15
  Speaker 8: the it seems like we've had money market rates at
• 24:18
  Speaker 8: five percent forever, but it really only has been a
• 24:20
  Speaker 8: short time the timeframe while this has been available, you know,
• 24:24
  Speaker 8: and FED is going to react based of economic data.
• 24:28
  Speaker 8: They I think that that we can expect some type
• 24:31
  Speaker 8: of right cuts and there is that also immediate reaction.
• 24:34
  Speaker 8: Historically large cap stocks react very positively. There's almost this
• 24:39
  Speaker 8: delayed reaction in small and midcaps, you know. So if
• 24:43
  Speaker 8: we look at the effect of the rate cuts, you know,
• 24:46
  Speaker 8: whether we get three this year, whether we get less,
• 24:49
  Speaker 8: whether they're pushed into twenty twenty five. But FED is
• 24:53
  Speaker 8: going to react to economic data, and you know, we're
• 24:56
  Speaker 8: paying attention to the same numbers, all.
• 24:58
  Speaker 5: Right, Katerina, thanks so much for joining us. Really appreciate it.
• 25:01
  Speaker 5: As always kind of read a Semonettie She's a senior
• 25:03
  Speaker 5: vice president private wealth advisor at Morgan Stanley Private Wealth Management.
• 25:07
  Speaker 5: Joining us from the town of Brotherly Love, Philadelphia via Zoomier.
• 25:13
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
• 25:17
  Speaker 1: weekdays at ten am Eastern on Apple car Play and
• 25:20
  Speaker 1: Android Auto with the Bloomberg Business app. You can also
• 25:23
  Speaker 1: listen live on Amazon Alexa from our flagship New York
• 25:26
  Speaker 1: station Just Say Alexa playing Bloomberg eleven thirty.
• 25:30
  Speaker 5: All right, a story that is out there for the
• 25:34
  Speaker 5: technology companies. It seems like we've seen this play before.
• 25:37
  Speaker 5: The European regulators they're not too happy or they take
• 25:42
  Speaker 5: a much heavier hand in terms of a regulatory oversight
• 25:45
  Speaker 5: to some of the big US technology companies. I'm thinking Apple,
• 25:48
  Speaker 5: I'm thinking Google, I'm thinking Meta and that's back in
• 25:51
  Speaker 5: the news here today. Mandy Singh joins US senior tech
• 25:54
  Speaker 5: analyst for Bloomberg Intelligence. Joinings here in a Bloomberg Interactive
• 25:57
  Speaker 5: Brokers studio. So, Mandy, those of a certain vintage like myself,
• 26:01
  Speaker 5: I can remember back to the late eighties early nineties
• 26:04
  Speaker 5: when it was Microsoft that really was under the regulatory
• 26:08
  Speaker 5: microscope of the European regulators. And the net result, it seems,
• 26:12
  Speaker 5: if I think back, was just a lot of checks
• 26:14
  Speaker 5: being written, a lot of fines being paid, but nothing
• 26:17
  Speaker 5: more than that. To the overall business model of Microsoft.
• 26:20
  Speaker 5: I either still that office, you know, bundle and so
• 26:22
  Speaker 5: on and so forth. Talk to us about what's going
• 26:25
  Speaker 5: on from Europe today as European regulars look at some
• 26:28
  Speaker 5: of these big US technology companies.
• 26:30
  Speaker 7: Yeah, and just to you know, start off with that
• 26:32
  Speaker 7: Microsoft comparison, I think one thing that did happen was
• 26:35
  Speaker 7: a change in behavior. So you could expect something similar
• 26:39
  Speaker 7: with these companies, even though you know it's unlikely they're
• 26:43
  Speaker 7: going to be broken up because of this, but you
• 26:45
  Speaker 7: can expect a change in behavior in terms of how
• 26:48
  Speaker 7: they operate. And the reason I say that is Microsoft
• 26:51
  Speaker 7: was an operating system company.
• 26:53
  Speaker 1: YEP.
• 26:53
  Speaker 7: They were layering on their Internet Explorer browser. What the
• 26:57
  Speaker 7: regulation intended to do was to decouple the two in
• 27:00
  Speaker 7: terms of giving more choices to the users. You're seeing
• 27:03
  Speaker 7: EU kind of pretty much play to that point where
• 27:07
  Speaker 7: these companies Apple and Google, they have the operating system,
• 27:12
  Speaker 7: they have the app store. They bundle a lot of
• 27:14
  Speaker 7: their own apps, right, so you have to use their
• 27:17
  Speaker 7: app store, give them a thirty percent commission, you have
• 27:20
  Speaker 7: to use Safari browser, you have to use Google Maps.
• 27:23
  Speaker 7: So that's what I think regulators are focused on. I
• 27:26
  Speaker 7: think they are probably five ten years too late. I mean,
• 27:29
  Speaker 7: look at you know all these The reason why they're
• 27:32
  Speaker 7: so big is because they operated like this for the
• 27:34
  Speaker 7: last ten years.
• 27:36
  Speaker 2: This is such a great point because like, I don't
• 27:38
  Speaker 2: want any of that to change because it'll make it
• 27:40
  Speaker 2: more annoying for me to do stuff on my phone. So,
• 27:43
  Speaker 2: like to your point of it being too late in
• 27:44
  Speaker 2: the beginning when I was adopting the iPhone, maybe, but
• 27:47
  Speaker 2: now that's just a pain. Is this going to hurt
• 27:50
  Speaker 2: them to make this case?
• 27:51
  Speaker 7: I mean regulation is always an afterthought. We have seen
• 27:55
  Speaker 7: that time and again. It comes in too late. And
• 27:58
  Speaker 7: look in this case, they are vouching for more open
• 28:02
  Speaker 7: app stores. So instead of Apple taking a thirty percent
• 28:06
  Speaker 7: cut and forcing everybody to use their payments platform, it's
• 28:09
  Speaker 7: about having third party platforms.
• 28:11
  Speaker 4: Now.
• 28:12
  Speaker 7: The one caveat there is if you bring in third
• 28:14
  Speaker 7: party platforms, gets what Google can launch their own app
• 28:17
  Speaker 7: store on iOS right now, Google, you know app store
• 28:22
  Speaker 7: is used in Android. If you start opening up the platform,
• 28:26
  Speaker 7: who does it benefit the most. I would argue Google
• 28:29
  Speaker 7: because then they can put their app store on iOS.
• 28:32
  Speaker 7: You can pay through the Google Android App Store on iOS.
• 28:36
  Speaker 7: So I think in effect, then even though the regulation
• 28:39
  Speaker 7: is well intended, it may actually end up, you know,
• 28:44
  Speaker 7: favoring Google if it turns out to the way I
• 28:47
  Speaker 7: think it is because the likes of Spotify and Netflix,
• 28:51
  Speaker 7: they're not going to create a new app store. It's
• 28:54
  Speaker 7: peanuts when it comes to saving on payments costs, Like,
• 28:57
  Speaker 7: what are you getting out of investing so much into
• 29:00
  Speaker 7: your own app store. Yes, it's good to have an
• 29:02
  Speaker 7: open platform. That's what Epic has been arguing. And you
• 29:05
  Speaker 7: know all the gaming companies, but I think the one
• 29:09
  Speaker 7: company it benefits the most here is Google.
• 29:11
  Speaker 5: That's actually pretty funny, all right, So just for thirty seconds,
• 29:16
  Speaker 5: how our investors thinking about this risk, the regulatory risks
• 29:19
  Speaker 5: to these big tech companies. How are they thinking about it?
• 29:21
  Speaker 7: I mean it's different from different companies. I think the
• 29:24
  Speaker 7: operating system gatekeeper analogy applies to Apple and Google specifically
• 29:29
  Speaker 7: for meta. They want you to pay to subscribe to
• 29:33
  Speaker 7: the apps if you don't want to be tracked. Now
• 29:36
  Speaker 7: that's interesting, right, we are so accustomed to using social
• 29:39
  Speaker 7: media apps as free because our data is what they
• 29:42
  Speaker 7: use for targeting. If you don't want to be tracked,
• 29:44
  Speaker 7: you have to pay meta, and I think that's not
• 29:47
  Speaker 7: going to be palatable for users.
• 29:49
  Speaker 2: So I love Mandy cuts through it right now. I
• 29:51
  Speaker 2: get it all right, Mandy, thanks lot really appreciate it
• 29:53
  Speaker 2: and keep saying Joining us from Bloomering Intelligence.
• 29:58
  Speaker 1: You're listening to the Bloomberg and Intelligence Podcast. Catch us
• 30:02
  Speaker 1: live weekdays at ten am Eastern on applecar Play and
• 30:05
  Speaker 1: Android Otto with the Bloomberg Business app. You can also
• 30:08
  Speaker 1: listen live on Amazon Alexa from our flagship New York
• 30:11
  Speaker 1: station Just Say Alexa, playing Bloomberg eleven thirty.
• 30:16
  Speaker 5: Thirty five years on Walstreet. I've had the pleasure of
• 30:18
  Speaker 5: working some really really good groups of people, and none
• 30:22
  Speaker 5: better Mount Rushmore type where the people of Payne Webber
• 30:25
  Speaker 5: nineteen eighty six and nineteen eighty nine, the Management, Audit
• 30:27
  Speaker 5: and Control group, don't ask, it's top secret. Mike Sullivan
• 30:31
  Speaker 5: ran that group, and pretty much everybody in that group
• 30:33
  Speaker 5: went on to have a pretty darn good career, and
• 30:36
  Speaker 5: none more than my man Joe DEGROSSI he's the chairman,
• 30:39
  Speaker 5: He's the Sea of Axis Capital I'm scared to ask
• 30:41
  Speaker 5: what Access Capital is. But he is in Miami, Florida,
• 30:44
  Speaker 5: and he did that decades before that it became trendy here.
• 30:47
  Speaker 5: He's been down there kind of running money down there
• 30:49
  Speaker 5: for a long time. Joe, thanks so much for joining us.
• 30:51
  Speaker 5: You're one of the off time greats. Tell us what
• 30:53
  Speaker 5: you're up to at Axis Capital these days?
• 30:56
  Speaker 9: Got well, first of all, that throwback to the mid
• 30:59
  Speaker 9: eight's just just dated me. So but it's nice here,
• 31:03
  Speaker 9: your boy. It's been way too long. So in a
• 31:06
  Speaker 9: few things. I've been down here in Miami twenty six
• 31:09
  Speaker 9: years now. I moved from Paineweber and joined a private
• 31:12
  Speaker 9: equity firm that turned out to be pretty successful, and
• 31:15
  Speaker 9: launched my own firm some years ago, and so run
• 31:18
  Speaker 9: a family office as well as private equity shop down
• 31:21
  Speaker 9: here in Miami.
• 31:22
  Speaker 5: So what do you guys doing in the markets here today.
• 31:25
  Speaker 5: I'm guessing you're not running a sixty forty portfolio, Joe.
• 31:29
  Speaker 9: Clearly not running a sixty forty portfolio. Are main focused today,
• 31:33
  Speaker 9: as you can probably see by the background, at least
• 31:35
  Speaker 9: for viewers who are watching the live stream, you know,
• 31:38
  Speaker 9: we're focused on with Access Capital introducing Interval Funds really
• 31:43
  Speaker 9: focused on this massive underserved market of accredited investors, folks
• 31:47
  Speaker 9: with sort of one to five million that represent the
• 31:51
  Speaker 9: mass affluent that up to now really have not been
• 31:54
  Speaker 9: able to invest in private investment. So we think the
• 31:57
  Speaker 9: next big wave in the capital markets will be a
• 32:00
  Speaker 9: significant reallocation among i'll called the mass affluent into private investing.
• 32:06
  Speaker 9: Because they're living longer, they need to match assets and
• 32:09
  Speaker 9: liabilities to make sure they don't outlive their income. And
• 32:13
  Speaker 9: so we're building a suite of products that we believe
• 32:16
  Speaker 9: will serve that accredited investor market very well.
• 32:20
  Speaker 2: Okay, let's just we're burying all the leads here. People.
• 32:23
  Speaker 2: What was Paul like in the eighties.
• 32:26
  Speaker 9: Paul was fantastic. I mean, I have nothing but thought
• 32:30
  Speaker 9: memories Paul. And it's been too long, and I know
• 32:32
  Speaker 9: we're due to have a reunion pretty soon. But Paul
• 32:34
  Speaker 9: was a great out to work with.
• 32:36
  Speaker 4: He really was.
• 32:37
  Speaker 5: It's funny we had a great group.
• 32:39
  Speaker 4: Again.
• 32:39
  Speaker 5: If I got my Pain Weber group, I've got my
• 32:41
  Speaker 5: Chase Manhattan group, my Salomon Brothers group. That the Pain
• 32:43
  Speaker 5: Weber group almost person for person, I'm talking to a
• 32:47
  Speaker 5: couple dozen people went on to have really good careers.
• 32:50
  Speaker 5: We kind of thought Joe was going to be the
• 32:51
  Speaker 5: black cheep, but he's ended up doing the best here.
• 32:54
  Speaker 5: He's still added here, Joe. You mentioned private credit here.
• 32:58
  Speaker 5: That's been a market that I've been really amazed to
• 33:01
  Speaker 5: watch developerally over the last ten to fifteen years. It
• 33:04
  Speaker 5: used to be kind of private equity is the place
• 33:06
  Speaker 5: you go to for some outsize returns. How do you
• 33:08
  Speaker 5: guys think about private credit?
• 33:11
  Speaker 9: Well, you know, look, I think private credit has stepped
• 33:14
  Speaker 9: in where the banks have walked away, and regulations on
• 33:17
  Speaker 9: the banking side have made it, you know, challenging for
• 33:21
  Speaker 9: banks to maintain market share in that space. And so
• 33:24
  Speaker 9: you've had a you know, a proliferation of funds credit
• 33:29
  Speaker 9: funds getting into this space. And of course, Paul, as
• 33:32
  Speaker 9: you know, you know, interest rates have been on the
• 33:33
  Speaker 9: side of credit for a long time up until recently,
• 33:37
  Speaker 9: up until twenty two, but they wrote a ten to
• 33:39
  Speaker 9: fifteen year wave of a declining interest rate environment. So
• 33:42
  Speaker 9: the total returns have looked particularly strong in that space.
• 33:46
  Speaker 9: I think what we're going to see now prospectively is,
• 33:50
  Speaker 9: you know, the major comeback of private equity. I think
• 33:54
  Speaker 9: that's going to be the place to be over the
• 33:56
  Speaker 9: next five to ten years, notwithstanding a lot of talk
• 33:59
  Speaker 9: about capital flow into that space over the years.
• 34:02
  Speaker 2: Okay, first of all, you guys are both serious and
• 34:04
  Speaker 2: disappointing me of what Paul is like twenty forty years ago.
• 34:07
  Speaker 2: But whatever, we'll let that slide. We use a private
• 34:09
  Speaker 2: equity because because I feel like it hasn't the whole
• 34:12
  Speaker 2: thing been none on private credit, not private equity.
• 34:14
  Speaker 9: Now, well, it's interesting. I mean, there's I don't know,
• 34:18
  Speaker 9: eighty or ninety interval funds now in the credit space,
• 34:21
  Speaker 9: maybe a dozen equity funds. So you know, people have
• 34:25
  Speaker 9: been chasing returns and they've been looking in the rear
• 34:28
  Speaker 9: view mirror. I think the future looking forward is is
• 34:32
  Speaker 9: allocations to private equity. And I'll tell you for a
• 34:34
  Speaker 9: very simple reason. You know, people are living longer. They
• 34:39
  Speaker 9: you know clearly, you know, there's this massive generational transfer
• 34:42
  Speaker 9: of wealth from a risk averse generation to a risk
• 34:46
  Speaker 9: tollering generation that I think is more informed. They know
• 34:50
  Speaker 9: they're going to live on average three to five years longer,
• 34:53
  Speaker 9: you know, than their parents or certainly their their grandparents,
• 34:55
  Speaker 9: and they're going to have to allocate capital accordingly. And
• 34:58
  Speaker 9: that means over the long term, you know, as we
• 35:00
  Speaker 9: know equities over the long term, you know, trounce fixed income,
• 35:05
  Speaker 9: notwithstanding what's happened over the past ten years.
• 35:07
  Speaker 5: So Joe, you were, as you mentioned, you got down
• 35:10
  Speaker 5: to South Florida way before it became trendy. Here talk
• 35:13
  Speaker 5: to us about how Miami has changed just over the
• 35:17
  Speaker 5: last four or five years. I mean, you know, kind
• 35:20
  Speaker 5: of pandemic. It seems like everybody and the brothers moving
• 35:22
  Speaker 5: down there.
• 35:24
  Speaker 9: It's it's really been incredible. I mean I've been down here,
• 35:26
  Speaker 9: as I said, you know, roughly twenty six years, and
• 35:28
  Speaker 9: we've seen more change in the past five years than
• 35:32
  Speaker 9: we saw on the prior all of twenty twenty one years.
• 35:35
  Speaker 9: And I think that's you know, certainly driven by COVID,
• 35:38
  Speaker 9: A no question about it. But I think COVID, you know,
• 35:42
  Speaker 9: in concert with technology, has made people realize and has
• 35:47
  Speaker 9: accelerated the understanding that you can be most anywhere in
• 35:50
  Speaker 9: the world and work and why not be in a
• 35:53
  Speaker 9: beautiful place. I mean when I moved down here, it
• 35:56
  Speaker 9: was really driven by the fact that an opportunity to
• 35:58
  Speaker 9: join a private equity shop, and it could have been
• 36:01
  Speaker 9: in Tuscaloosa, could have been in Idaho. Now what we're
• 36:05
  Speaker 9: seeing is is I called the sort of that Malcolm
• 36:08
  Speaker 9: Gladwell tipping point here in Miami, where you almost have
• 36:12
  Speaker 9: to be here as a firm, if you're in the
• 36:14
  Speaker 9: wealth management space, if you're in the private equity space,
• 36:17
  Speaker 9: you have to be here because this is where the
• 36:19
  Speaker 9: action is and it's a great quality of life. And
• 36:22
  Speaker 9: you know, we all know taxes are far lower down here.
• 36:24
  Speaker 2: So now you're fairly killing him, Joe exactly.
• 36:30
  Speaker 5: I'm sorry, Yeah, all right, So talk to what is
• 36:35
  Speaker 5: that you mentioned? Interval Capital, Joe, What's what is that concept?
• 36:40
  Speaker 9: Well, it's it's Access Capital is our firm, but we're
• 36:42
  Speaker 9: really focused on launching a suite of interval funds, and
• 36:45
  Speaker 9: it's really this, you know, this simple. The Investment Company
• 36:48
  Speaker 9: Act in nineteen forty basically says, if you're super rich,
• 36:52
  Speaker 9: qualified purchaser with five million or more, you can invest
• 36:55
  Speaker 9: in private equity and private credit funds. There's that line
• 36:59
  Speaker 9: of dem otion though. If you are not a you know,
• 37:02
  Speaker 9: a wealthy investor five million or more, you're basically shut out,
• 37:06
  Speaker 9: and there's there's only one way to offer products to
• 37:10
  Speaker 9: accredited investors. You know, folks with between one and five million,
• 37:13
  Speaker 9: and that's to register your vehicles. And that's the safe
• 37:17
  Speaker 9: harbor under the Investment Company Act of forty that says,
• 37:19
  Speaker 9: if you register your vehicles just like sort of like
• 37:22
  Speaker 9: an IPO, then you can bring in an unlimited number
• 37:25
  Speaker 9: of you know, I'll call them smaller investors. And you know,
• 37:29
  Speaker 9: what we're seeing is there's fifteen trillion dollars among accredited investors,
• 37:34
  Speaker 9: about one percent invested in private investments.
• 37:37
  Speaker 2: Uh.
• 37:38
  Speaker 9: Compare that to qualified purchasers, folks with five million or more,
• 37:41
  Speaker 9: who were at ten percent allocated to private investments. Goldman
• 37:45
  Speaker 9: Sachs's most recent Family Office report says that the family
• 37:48
  Speaker 9: offices are twenty seven percent invested in private investment. So
• 37:52
  Speaker 9: we believe the future is in the smaller investor.
• 37:55
  Speaker 5: Yeah, Joe, great to talk to you again, buddy. Always
• 37:58
  Speaker 5: good and always knew you're doing well down there in
• 38:00
  Speaker 5: South Florida, doing it way before anybody else. Was Joe
• 38:03
  Speaker 5: de Grossi. He's a chairman and CEO of Access Capital
• 38:06
  Speaker 5: based out in Miami, Florida. We both started our career
• 38:10
  Speaker 5: as Payne Webber June sixteenth, nineteen eazing.
• 38:13
  Speaker 2: Okay, so what was Joe like.
• 38:15
  Speaker 5: Funny, the really funny guy in our group. We had
• 38:18
  Speaker 5: a lot We actually just had a great group of people,
• 38:20
  Speaker 5: still very tight. We get together every year or two
• 38:23
  Speaker 5: dinner at Smith and Lenski's in mid time ahen people
• 38:26
  Speaker 5: come in flying from all over the world to come
• 38:28
  Speaker 5: in and kind of hook up because for a lot
• 38:30
  Speaker 5: of us it was the first job out of college
• 38:32
  Speaker 5: and it was a really tight group and we stayed
• 38:34
  Speaker 5: tight throughout the throughout the year. So it's a good group,
• 38:38
  Speaker 5: good way to start your career. Ye story. And see
• 38:41
  Speaker 5: that's the example I bring up. If you're working from
• 38:44
  Speaker 5: home and you don't get that, and I don't, and
• 38:46
  Speaker 5: I'll tell you what that's That's what it's all about
• 38:48
  Speaker 5: for me. So good stuff checking up.
• 38:50
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